As violence rises, rebuilding stalls

A parade of 20 blue-and-white buses filled with Russian and Ukrainian oil workers lumbered out of Baghdad Thursday - the first exodus of some 800 contractors Moscow ordered to leave. Thousands of foreign contractors are still working on electricity, pipelines, roads, and buildings in Iraq. But the pace of rebuilding is slowing, and in some cases grinding to a halt.

The epidemic of kidnappings in Iraq has put a chill through the foreign community here. Journalists are moving out of houses to fortified hotels, private contractors are hiring extra layers of security, and almost everyone is severely limiting their movements. Many contractors, concerned about unsafe travel, have taken days off work in recent weeks.

The dramatic deterioration in security is now threatening the speed with which US and other reconstruction money can be spent in Iraq. The $18.4 billion, allocated last year but slowed by a lengthy contracting and review process, has started to trickle out and was expected to become a deluge by July.

The US-led Coalition Provisional Authority sees the spending as a linchpin for stability. It hopes that job creation - in a country where unemployment runs as high as 50 percent - would help drain the pool of potential insurgents.

But with violence at its highest point since the war began, concern is growing that starting a virtuous cycle between job creation and better security has just gotten a lot harder.

"The violence may slow us down, it may make work more expensive, but we're not going to let it stop us,'' says Capt. Bruce Cole, spokesman for the CPA's Program Management Office, which oversees the US-allocated spending. "If we were to allow ourselves to be stopped, we'd be losing perhaps our single biggest tool for improving the security situation."

But using that tool is growing harder. Fighting with Sunni insurgents in Fallujah and a showdown with the Mahdi army, a Shiite militia loyal to the cleric Moqtada al-Sadr, in Najaf, has increased antiforeign sentiment. At least 50 contractors were killed in April, and at least 40 foreigners have been kidnapped across Iraq during the past three weeks, though more than 20 of them have been released, including three Japanese who were handed to a Sunni clerics committee Thursday.

Wednesday, gunmen filmed the execution of one of their captives, Italian Fabrizio Quattrocchi, and delivered it to the Al Jazeera TV; Thursday, two more Japanese were kidnapped after being lured out of Baghdad to film a helicopter crash; and six contractors from Houston-based Kellogg, Brown, and Root remain missing since an attack on their convoy delivering fuel to US troops last Friday.

Tensions in Baghdad rose Thursday after leaflets from the "Mujahideen Forces" were distributed, threatening attacks in the city through April 23. The leaflets warned shops and schools to close.

"Your brothers the Mujahideen in Ramadi, Khaldiya, and Fallujah will transfer the resistance fire to Baghdad to help our Mujahideen brothers from the Mahdi Army to free you from the darkness of the occupier," the statement said.

The effect of this new, more threatening atmosphere was evident in Baghdad Thursday as at least some of the workers from Russia and former Soviet states headed to the Baghdad airport. Their decision to leave followed the brief kidnapping of five Ukrainian and three Russian engineers earlier in the week.

In recent weeks, companies like KBR, a subsidiary of Halliburton that has billions of dollars in work in Iraq, have lost US workers afraid of continuing to drive dangerous roads, though CPA officials say they haven't seen major disruptions in service deliveries or reconstruction work yet. Halliburton has more than 20,000 employees in Kuwait and Iraq under contracts that could end up being worth more than $15 billion.

Nongovernmental organizations have also fled Baghdad, though most say their evacuations are temporary. CPA officials say the numbers leaving Iraq are small.

"There is still substantial interest from contractors who see an opportunity in the current situation,'' says a CPA spokesman.

But in addition to foreigners, Iraqis working with the coalition have been threatened or come under attack for months. At the Numaniyah military base near the southern city of Al Kut, about half of 2,000 local workers rebuilding the base in a $65 million contract held by Earth Tech Inc. have stopped working because of recent unrest in that city.

April was supposed to be the month when reconstruction spending kicked into high gear. At the end of March, Andy Bearpark, the head of the CPA's infrastructure efforts, said that much of the groundwork for contract spending had already been laid and estimated that Iraq would quickly start to see a surge in construction, new jobs, and money flowing into the economy.

Instead, the fighting around Fallujah, which lies along the main western road to Jordan, has cut a principal truck route, and companies have begun spending even more of their money on security.

The Program Management Office's Cole says the US expects security costs to run about 10 percent of construction work in Iraq - which could eventually total $1.2 billion. Some private security contractors, who asked not to be named, say rates for guards are going up as the risks rise.

For now, the US is trying to focus on job creation. Groups like the Mahdi army draw heavily on urban and unemployed young men. Cole says about $5 billion in spending should be well under way by July 1, bringing an estimated 50,000 new jobs to Iraq, but that the office is looking at ways to accelerate the rate, if possible.

Iraq hostage update

More than 40 foreign workers were taken hostage during the past two weeks. At noon Thursday, nine were still captive.

• 7 Chinese contractors abducted in Fallujah, April 11, and released the next day.

• 7 South Korean missionaries abducted near Baghdad, April 8, and released the same day.

• 5 Ukrainian and 3 Russian energy workers abducted in Baghdad, April 13, and released the next day.

• 5 Japanese civilians - aid workers, a journalist, and a researcher - abducted in separate incidents, two are still captive.